THE chief of one of Israel’s intelligence agencies was recently surprised to discover that Chinese construction workers on a major building project might be able to see into a sensitive installation. But it is in keeping with a trend. Israeli security officials are growing increasingly uneasy with China’s expanding role in the economy, particularly its involvement in several big infrastructure projects and its purchase of cutting-edge technology.

The concern falls into two broad categories. The first is over Chinese control of strategic infrastructure and the possibility of espionage. Officials are reluctant to go on the record, but many point to the new commercial-shipping facility in Haifa as an example of what is at stake. It is run by the Shanghai International Port Group, which won the tender in 2015 and began working on the site in June. Haifa is Israel’s busiest port and the base of its main naval fleets. Israeli submarines, widely reported to be capable of launching nuclear missiles, are docked there. Yet the deal with the Chinese firm was never discussed by the cabinet or the national security council, a situation one minister described as astonishing.

The other concern is over the transfer of weapons technology to the Chinese. Gone are the days when Israel would sell them military hardware. After numerous complaints from America, Israel agreed to cut off arms sales to China in 2005. But a grey area has sprung up around dual-use technology, such as artificial intelligence and cyber-security products, which could be used for surveillance and intelligence purposes. This worries Israel and its allies alike. Security officials note that China is the biggest trading partner of Iran, Israel’s mortal enemy. China has helped modernise Iran’s armed forces and sold it civil nuclear technology.

The Chinese are always trying to find ways to buy dual-use products, say Israeli businessmen. Security officials fear more of it is making its way to China.

Israel’s commercial ties with China have flourished under Binyamin Netanyahu, the prime minister, who met President Xi Jinping in Beijing last year (see picture). In the first eight months of 2018 Israel sold $3.5bn-worth of goods and services to China, up 63% compared with the same period last year. China accounts for a third of the investment in Israel’s impressive technology sector, said Mr Netanyahu last year. The prime minister will host Wang Qishan, China’s vice-president, for an “innovation summit” in Jerusalem on October 24th. Mr Wang, the most senior Chinese official to visit Israel, will be accompanied by a large delegation of Chinese investors, including Jack Ma, China’s best-known e-commerce tycoon.

But Israel’s oversight of its trade with China does not appear to be keeping up with the pace of commerce or technology. Special export licences are needed to sell some dual-use technologies, but there are plenty of loopholes, say Israeli businessmen. In his zeal to improve commercial ties, Mr Netanyahu has dragged his feet on plans to form a government agency that would regulate deals with China—and, he fears, slow down trade. “Israel has to do business with China, of course, but there is no serious mechanism to make sure that we don’t sell off key economic assets and valuable technological knowledge,” says Efraim Halevy, a former head of Mossad, Israel’s foreign-intelligence service.

With oversight lacking, Israeli firms are often left to police themselves. “Ultimately Israeli companies want to be able to work both in China and in the West,” says an Israeli businessman with nearly two decades of experience selling high-tech products to the Chinese. “It means we have to regulate ourselves and learn how to say no to the Chinese when they want to buy or invest in some of our products.” Unsurprisingly, security officials are not satisfied with that set-up.



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